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Advice aimed at helping operators stay on the right side of new tax laws has been published by HMRC today (15 February).
The briefing document sets out how it will monitor organisations engaging drivers and other contractors who work through their own limited company when new tax rules kick in.
Under the updated IR35 rules, from 6 April large and medium-sized haulage companies - with net turnover of above £10m or 50 or more staff – will no longer be able to hire drivers that work as limited companies.
Instead drivers will need to be employed as a PAYE worker - either by the haulier, the agency or via an umbrella company.
The changes make it easier for HMRC to prosecute tax evasion in the industry by switching the onus from the limited company driver to the end client who must ensure their agency worker is employed within the rules and will be responsible for any underpayment of tax by the driver.
The end client or agency also becomes responsible for deducting the relevant tax and NI contributions at source.
The HMRC briefing document, published today (15 February) sets out how it will monitor organisations engaging drivers and other contractors who work through their own limited company.
The briefing explains how HMRC will support customers to comply with the off-payroll working rules, as well as how it will intervene where firms deliberately don’t comply.
It also provides an overview, and operational case studies, as well as targeted advice.
The briefing document notes that HMRC will apply a “light touch approach” to penalties in year one and not using information acquired as a result of the changes to the off-payroll working rules to open a new compliance enquiry into returns for tax years before 2021 to 2022, unless there is reason to suspect fraud or criminal behaviour.
It also warns it will take a dim view of any attempt to use tax avoidance schemes that claim to avoid the rules.
HMRC is also providing webinars for companies as well as updated guidance and additional support for contractors via its website.
An HMRC spokesperson said: “Today’s publication explains how we will continue to support organisations to comply with the off-payroll working rules, once they take effect on 6 April 2021.
“It also shows what HMRC will do to identify and step in where organisations deliberately try to avoid paying what is due under rules.
“This builds on our existing commitments to a supportive approach to help organisations comply with the new rules, and the comprehensive education and support HMRC are offering to help all those affected prepare.”
The HMRC briefing document can be found here:
